D.A.R.E. to Market Off-Label Uses of Prescription Drugs? Make Sure You are in the Second Circuit:United States v. Caronia and the New Off-Label Landscape

Truthful, non-misleading off-label promotion of prescription drugs is not illegal. At least, not in the Second Circuit. This, despite the billions of dollars in civil and criminal penalties assessed against pharmaceutical manufacturers for the promotion of non-FDA approved, or “off-label,” uses for prescription drugs.

In United States v. Caronia, 703 F.3d 149 (2d Cir. 2012), the Second Circuit reversed on free speech grounds the criminal conviction of a pharmaceutical sales representative for conspiracy to market off-label uses of a prescription drug. The court held that the conviction violated the First Amendment because the government’s enforcement efforts were not “narrowly drawn” to further its interests in drug safety and public health. The case is significant because it is the first to hold that prosecution under the Food, Drug, and Cosmetic Act (“FDCA” or “the Act”) of truthful, non-misleading speech that promotes lawful off-label use of an FDA-approved drug is unconstitutional.

The Regulatory Landscape

The federal government has prosecuted hundreds of companies and collected billions of dollars for illegal off-label promotion. Prosecution of these claims is spurred in part by whistleblowers who file qui tam actions under the False Claims Act and collect a portion of the government’s recovery. Many times, the suits also include an allegation that the company engaged in Medicare fraud by submitting false claims for reimbursement. For example, in February 2010, an Ohio-based manufacturer of surgical ablation devices agreed to pay the government $3.8 million to settle claims that it illegally marketed its devices to treat atrial fibrillation. Press Release, Dep’t of Justice, Atricure to Pay U.S. $3.76 Million to Resolve Medicare Fraud Allegations (Feb. 2, 2010). Ablation devices use radiofrequency waves to stop bleeding wounds. Cardiologists had used similar devices to treat the abnormal heart rhythm caused by atrial fibrillation for decades. Indeed, by December 2011 the FDA approved the Ohio company’s Synergy Ablation System for the treatment of atrial fibrillation.

The government prosecutes off-label promotion of drugs and medical devices even though the FDCA does not expressly criminalize off-label promotion. Instead, the Act prohibits “misbranding.” A drug or device is “misbranded” if, among other things, it is marketed without adequate directions by which a person safely can put the drug or device to its intended use. See 21 U.S.C. §§ 331(a), 352(f). The FDA regulates and approves drug labeling, directions, and branding. A drug marketed for a use that is not contemplated by the drug’s FDA approved labeling lacks adequate directions for safe use and, therefore, is misbranded. See 21 C.F.R. §§ 201.5, 201.128. Drug misbranding is a criminal offense punishable by up to three years imprisonment and a $10,000 fine.

Doctors, on the other hand, may prescribe medications and medical devices for off-label uses. Despite this fact, the FDA prohibits pharmaceutical representatives from discussing non-FDA approved uses with physicians. Proponents of off-label marketing have long argued that the government’s prosecution of truthful, off-label promotion of drugs and medical devices impedes physicians and patients’ access to useful medical information. The Second Circuit’s opinion in Caronia may change this landscape.

The Caronia Decision

Orphan Medical, Inc. hired Alfred Caronia as a sales representative to promote Xyrem, a drug approved to treat two different conditions associated with narcolepsy. Xyrem is a nervous system depressant whose active ingredient is gamma-hydroxybutyrate (“GHB”) — also known as the “date rape drug.” Potential side effects include seizures, coma, and sometimes death. Due to the safety risks, the FDA required Xyrem’s label to include a “black box” warning — the most serious warning placed on prescription medication labels.

In the spring of 2005, the FDA’s Office of Criminal Investigations launched an investigation into Orphan’s off-label promotion of Xyrem. With the help of a cooperating informant posing as a prospective Xyrem customer, the government recorded two conversations in which Caronia promoted the drug’s efficacy in treating Fibromyalgia, restless leg syndrome, Parkinson’s disease, other muscle disorders, and chronic pain.

The government charged Caronia with conspiracy to introduce a misbranded drug into interstate commerce and introducing a misbranded drug into interstate commerce. Caronia moved to dismiss the charges as unconstitutional under the First Amendment. The district court weighed Caronia’s argument and ultimately found that the FDA’s ban on off-label promotion was not more extensive than necessary to achieve the FDA’s objectives.

At trial, the government repeatedly argued that Caronia promoted and marketed Xyrem for an unapproved use. As the Second Circuit later observed, “the government’s theory of prosecution identified Caronia’s speech alone as the proscribed conduct.” A jury convicted Caronia of conspiracy to introduce a misbranded drug into interstate commerce. The court sentenced him to one-year probation and one hundred hours of community service.

On appeal, the government argued that the First Amendment was not implicated because Caronia was not prosecuted for his speech. Instead, the government urged that Caronia’s promotion of Xyrem for off-label use served only as evidence that Xyrem was misbranded. The majority rejected this argument, observing that the government’s theory of the case clearly contemplated that Caronia’s speech alone was criminal.

The court avoided passing on the constitutionality of the FDCA by determining that the Act does not expressly criminalize the off-label promotion of prescription drugs and medical devices. The court went on to determine whether the government’s prosecution of Caronia’s speech passed constitutional muster under a heightened scrutiny standard. Applying a four-part test set out in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), the court vacated Caronia’s conviction. Although the court found that the FDA’s interest in drug safety and public health were substantial, it determined that prohibiting the truthful, off-label promotion of a drug “does not directly advance [the government’s] interest in reducing patient exposure to off-label drugs or in preserving the efficacy of the FDA drug approval process.” The court further noted that allowing physicians to prescribe drugs for off-label use, but prohibiting pharmaceutical manufacturers from disseminating information related to that use, could inhibit informed and intelligent treatment decisions to the public’s detriment.

The government strategically opted not to appeal the Second Circuit’s decision and risk a farther-reaching opinion of the United States Supreme Court. At least for now, Caroniastands as the law in the Second Circuit.

Caronia’s Implications

Whether Caronia actually will curtail FDA prosecution of off-label drug promotion remains to be seen. The government’s argument on appeal perhaps suggests its path to future prosecution. The government argued that Caronia was not prosecuted for his speech; rather, his speech was evidence of his intent to introduce a misbranded drug into the marketplace. The Second Circuit determined that this argument was “belied by [the government’s] conduct and arguments at trial.” One potential outcome of Caronia, then, simply may be that the government focuses its prosecution theory on intent rather than on the speech itself.

Perhaps the most important implication of the Second Circuit’s decision is that it imposes a greater burden on the government to establish that promotion is false or misleading, as opposed to simply off-label. Moreover, the decision could prompt the FDA to adopt a more nuanced enforcement position that would allow drug manufacturers to disseminate truthful, non-misleading information about non-FDA approved uses of drugs.

Although Caronia is a landmark decision that many consider a positive step toward a more balanced approach to drug and medical device promotion, pharmaceutical manufacturers should exercise caution. Caronia applies only in the Second Circuit and protects only truthful non-misleading information. When it comes to non-FDA approved uses of drugs and medical devices, this can be a fine line to walk.